Westpac 1Q Profit Rises as Credit Quality Improves

By Alice Uribe

SYDNEY--Westpac Banking Corp. said its profit in the fiscal first quarter was higher than the quarterly average of the second half of fiscal 2020, with the company expecting pandemic-related loan deferrals will continue to fall.

The lender, one of Australia's largest, recorded an unaudited net profit of 1.70 billion Australian dollars (US$1.32 billion) in the December quarter, higher than the quarterly average of A$550 million in the second half of fiscal 2020.

"Our first quarter 2021 result was higher than the second half 2020 average, mainly from an impairment benefit reflecting both improved credit quality and a much improved economic outlook," Westpac Chief Executive Peter King said.

Cash earnings, a measure of profit adjusted for fair value and hedging movements and is the basis for calculating dividend payouts, was A$1.97 billion for the quarter, up on the quarterly average of A$808 million in the second half of fiscal 2020.

The group's common equity tier 1 capital ratio was 11.9% at the end of December, up 74 basis points over the quarter and 111 basis points over the year.

Westpac recorded A$11 billion of Australian mortgage deferrals at the end of January, saying that it expected a "significant roll off expected in February and March."

It said that A$400 million in small business loans were in deferral at the end of January, and represented less than 1% of the small business portfolio.

Write to Alice Uribe at [e-mail]

(END) Dow Jones Newswires

02-16-21 1641ET